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‘The Budget’s only context is elections’

Our Bureau Chennai | Updated on February 11, 2018 Published on February 11, 2018

P Chidambaram, former Union Finance Minister, at a Budget analysis organised by LIBA in Chennai on Saturday   -  Bijoy Ghosh

The Union Government may have presented the budget for 2018-19 with an eye on elections, but “I thank god this government will not present a sixth budget,” felt former Union Finance Minister P Chidambaram.

In its fifth and final Budget after coming to power, the BJP government has presented a Budget with empty promises. It has not addressed immediate concerns such as agriculture distress, employment generation or fiscal consolidation, he said.

The Budget has “no context or purpose except win the election expected in 12-15 months,” he said in his analysis at a meeting organised by the Loyola Institute of Business Administration.

GDP growth

When the BJP governmentcame to power in 2014, the GDP growth had been 7.5 per cent and in 2015-16 it was 8.1 per cent but “we shot ourselves in one leg with demonetisation and again in the other with the flawed implementation of GST.”

Growth had faltered in the current year at 7.1 per cent and is expected to drop to 6.5 per cent by the end of 2018-19.

This was happening at a time when global growth is brisk. But the context is “not unfavourable unless we do not shoot ourselves in the head after shooting our legs,” he quipped.

Demonetisation and GST

After the two major shocks of demonetisation and GST, the government should have promoted welfare. “But unfortunately it has misjudged the context and overlooked purpose in the last year of its term,” he felt.

It has made empty promises of setting Minimum Support Prices of crops at 50 per cent over the cost of production without providing any clarity. This has left more than half the population in the lurch. Between 2004 and 2014 when the Congress-led government had been in power, the MSP had been doubled.

The major provider of jobs is the SME sector but this has been devastated by demonetisation. Even at the high growth rate witnessed in 2014-15 employment generation was 23 lakh and in 2015-16 it was 27 lakh, according to EPFO statistics. But now with growth on a slide, the government is claiming employment generation at 75 lakh, he said.

Even the health insurance scheme of covering 50 crore individuals was empty rhetoric as there has been no provision made in the budget for the huge insurance premium that would be needed, he pointed out.

The coming year will not be a happy one with the RBI forecast indicating higher inflation at about 5.6 per cent while the growth rate is expected to drop further. But the government is unwilling to acknowledge this.

“Every deficit target has been breached”, borrowing will be up, and revenue expenditure is growing. The government is being a ‘reckless borrower and spender’ and ‘severely compromised macroeconomic stability’, Chidambaram said.

Published on February 11, 2018
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